tv Nightly Business Report PBS October 27, 2016 6:30pm-7:01pm PDT
>> announcer: this is "nightly business report" with tyler mathisen and sue herera. a tale of two tech stocks. one beat earnings expectations by a lot. the other missed by a lot. and one may be a better long term investment than the other. protecting your privacy. broadband providers now need your permission to sell your digital information. a win for consumers. a blow for telecom and cable companies. final stretch. why issues surrounding trade and agriculture could tip the scales in the battleground state of georgia. those stories and more tonight on "nightly business report" for thursday, october 27th. good evening, everyone, and welcome. two powerful tech companies reported very different
quarterly results late today. we begin with amazon and its big earnings miss, not coming anywhere near where wall street was expecting. and one reason was a sharp rise in the e-commerce company's shipping costs which rose more than 40%. other expenses included investments in new growth markets like fashion and beauty. here are the numbers. amazon earned 52 cents a share. wall street was looking for 78 cents. revenue rose 29% from a year ago to $32 billion. but its sales guidance wasn't as strong as some would have liked. that sent shares lower in initial after hours trading. here's the one-key take-away from amazon's results. >> reporter: over the last two quarters, amazon has blown earnings expectations out of the water. when it came up short this time, the stock went lower in the after hours. amazon was expected to make a killing in the e-commerce space during the all-important holiday
shopping season but its outlook fell a little short. on the bright side, its e-cloud business continues to grow at a healthy clip. meantime, i'alphabet, the world's second largest company and the parent of google, reported its profits too, and they blew past expectations. it is one of the dominant players in mobile. alphabet earned $9.06 a share. that was a full 43 cents better than expectations. revenue was up about 20% to more than $22 billion. that along with plans tore purchase 7 billion of its class "c" shares helped the stock rise in after hours trading. jon fortt takes a closer look at alphabet's quarter.
>> reporter: google out with earnings that beat analysts' expectations. the real number you need to pay attention to in this report is paid clicks. they are through the roof, mainly because of growth at youtube that continues to be a bigger and bigger share of google's advertising revenue. mobile is a part of that. it is absolutely driving results. for "nightly business report," i'm jon fortt. so as we said, two very different earnings outcomes for amazon, and google's parent company alphabet. which might be a better long term investment in your portfolio? dan morgan joins us, he owns shares of both companies and he joins us now. dan, nice to see you again, welcome back. >> how are you doing? >> let me start first of all with amazon's miss. were you surprised? >> it was a little bit disappointing. revenue was pretty much in line, as you said, earnings was way below. we know that bezos is known to
spend money on future products and fulfillment centers. we thought this had gotten behind us a little bit. >> the big factor there, it seems, was the cost of shipping which has gone up. does amazon -- and i know they've made some steps in this direction -- does amazon need to capture more of its own shipping, in other words build its own network? >> it's interesting, tyler, because when you look at the increase in prime, right, which is free shipping, $99, you can buy stuff and get free shipping, one of the concerns of that was that it was going to eat into margins a little bit or eat into costs, because now amazon is taking on that cost. so you're presenting an interesting proposal, which is do they start kind of taking care of that and trying to bring that cost down, as opposed to relying on u.s. post office or
ups or something. that's kind of an interesting dynamic of the whole prime phenomenon. >> let's switch to google and alphabet, its parent company. that was the opposite issue, it out-performed on its earnings on the top and bottom line. you own both shares, dan. are you more inclined towards google and alphabet at this point than you are to amazon? >> well, you know, sue, it's hard just on one quarter to make a judgment. i mean, amazon is still really, really interesting in the fact that we haven't talked about their aws or web service group. it was up about 55%. they did about $3.2 billion. that whole cloud component on amazon makes it very interesting. but, you know, google is very interesting too. the fact that we haven't talked about the things that they've done with their artificial intelligence chips, they just came out with a new phone, the pixel, $650. they're doing some things that may really set them apart in terms of technology that they have that other people don't.
both companies, we both own both companies, like both companies. again, it's very hard to say just because one missed and one did well in the quarter we're going to get rid of amazon and buy google. they're both interesting companies, in terms of the things they're doing away from their core businesses. >> on that note, dan, thank you so much, dan morgan with synovis trust. stocks dropped on this, the busine bu busiest day of earnings season. the dow jones industrial average fell 29 points to 18,169. nasdaq off 34. the s&p 500 dropped six. the biggest chip deal in history was made official. qualcomm will buy nxp semiconductor for $39 billion. as we've reported, the two companies have been in talks for a while. it follows a wave of other chip makers who have merged. the qualcomm ceo says this deal will extend qualcomm's reach beyond smartphones.
>> if you look at the larger context of what's happening in the industry, the car, the internet of things, the amount of technology and technological change that's going to occur in both those industries, it reminds me of what the smartphone looked like before there was a smartphone. everyone was trying to figure out how do you assemble all of the assets, the technology, to be successful in that huge transition. that same thing is going to happen in the internet of things, in automotive. we're happy to have the big pieces to be able to drive it. >> shares of both nxp and qualcomm rose in trading today. gannett's potential takeover of trunc may be in doubt. the banks involved in the deal are backing out. gannett, owner of usa u"usa tod wanted to buy tronc, the company
formerly known as tribune publishing. the two companies remain in advanced talks. but the damage was done. tronc dropped nearly 28%, gannett down 17%. ups delivered on revenue in the latest quarter, beating wall street expectations. the world's largest package delivery company said it was helped by a rise in the number of daily shipments. as morgan brennan reports, ups has turned its attention to what it expects to be another record breaking holiday season. >> reporter: ups is gearing up for another record holiday season. the delivery giant expects to move more than 700 million packages between thanksgiving and new year's eve, a staggering sum that's 14% more than last year. there are two additional delivery days on the calendar this holiday season. but the big jump can still be largely attributed to the persistent surge in online shopping activity. >> we'll see over 60% of those days having over 30 million
packages. a few years ago we might have had two or three days over 30 million. but we're prepared. we've been spending the entire year making sure that we can make the necessary adjustments, collaborating with our customers, and ensuring that we're going to deliver a great christmas season for everybody around the world. >> reporter: to get it right, ups is deploying a specialized routing software in all its u.s. delivery trucks, adding temporary facilities to handle the flood of packages, and recruiting 95,000 seasonal workers. those details coming on the heels of earnings results as well, with ups reporting that profit and revenue both grew last quarter and the company on track to hit its 2016 guidance. as e-commerce demand continues to soar and as more retailers look to have goods moved as quickly as possible, ups is also making a bigger long term investment that won't begin to pay off until late next year. the company is purchasing more planes for the first time since 2013, expanding its existing fleet of over 500 owned and leased jets.
and it isn't disclosing the cost of the boeing 747-a freighters. the list price is in the billions of dollars. investors say it stokes uncertainty, one reason stocks came up pressure today. >> if it modernizes the fleet, lowers the cost of shipping, more fuel efficient, then it's great news, it can help margins, that's certainly what it did for fedex. if it doesn't, if it just increases capacity and puts pressure on global shipments, that's bad. >> reporter: heading into the final months of 2016, it's still all about the holiday season, as ups and rival fedex prepared to deliver a record number of gifts to consumers. and if all goes well, solid returns to investors. for "nightly business report," i'm morgan brennan. still ahead, big investment. why one candidate for president wants to spend a trillion dollars fixing our roads, bridges, and more.
voted 3-2 to approve first time privacy rules for broadband. from now on, internet service providers like at&t, comcast, and verizon, must get consent from consumers before using data like a customer's web browsing history or what apps are used for marketing and advertising. >> it is the consumer's information. it is not the information of the network the consumer hires to deliver that information. >> reporter: republican commission members opposed the new policy. they say it unfairly gives websites like facebook, twitter, and google, the ability to harvest more data than service providers. >> nothing in these rules will stop providers from harvesting and monetizing your data, whether it's the websites you watch, what you visit, or the youtube videos you watch or the e-mails you send, or the search
over the next decade. the outline, drafted by his advisers, relies on private funding. john harwood is following the story for us from washington. john, mr. trump has been speaking about spending lots of money on infrastructure for some time now. is the price tag here what's new, or is there other things here that are new? >> reporter: the price tag is the same. he's been saying $1 trillion for a while, sue. what's new is that his advisers, peter navarro and wilber ross, outlined how the fund they're proposing would actually work. essentially they're saying private investors would put up $167 billion and the rest would be borrowed money. and the money would be repaid by the revenue streams from projects that they would be building. >> so john, how does this proposal compare with hillary clinton's? >> reporter: well, it's twice as big as hillary clinton's. she's got a $500 billion infrastructure proposal. a bunch of that, more than half of it would be direct public
spending. but hillary clinton would also create a similar private fund, an infrastructure bank with $25 billion, to also try to leverage private investment. one of the key differences is donald trump's program would apply to programs with dedicated revenue streams, user fees on the people who consume it. hillary clinton's does not have that restriction, therefore it would be generally available infrastructure. some people might object to the privatization component in donald trump's plan. >> given how close we are to this election, john, might this proposal make a significant difference in the race at this point or not? >> reporter: i doubt it. policy at this point doesn't really break through, given how much is known about these candidates. but the idea of spending -- putting a lot of people to work building infrastructure is something with appeal in the states like ohio and pennsylvania that donald trump is counting on for his electoral vote majority if he can get one. of course we know that he's down about six points in national
polls. he's got a long road to travel to get back in this race. >> so i'm clear, mr. trump's plan would target things like toll roads that have revenue streams, airports that have revenue generating capacity, right? >> reporter: they say they are not in favor of toll roads themselves. they haven't really laid out all of the elements. but it would have dedicated user funds. that is how they say they would get borrowing costs down, by reducing risk. >> john harwood, thank you so much, from washington. now to the clinton camp where a newly-leaked memo indicates two chief fundraisers from the clinton foundation urged donors to steer business including paid speech opportunities to former president bill clinton. amon, what did we learn today that we didn't already know? >> reporter: tyler, for one thing we learned that president clinton's top aide doug band thought of himself as the ceo of
clinton inc. and maybe bill clinton as the chairman of that enterprise. doug band laid out in this stolen memo on elaborate strategy whereby all the elements of the clinton universe with raise money and generate clients from pretty much the same group of clients, the clinton foundation, the clinton global initiative, those are the charitable arms, and doug band's private consulting firm called teneo would all hit up the same set of clients for donations and revenue. that was an intentional effort going back to the early days of bill clinton's post-presidency. >> is any of this illegal? >> reporter: it doesn't seem to be illegal. as of right now we're not seeing evidence in these wikileaks e-mails that anybody traded favors in exchange for these donations. we're not seeing any indication of any illegal money changing hands. what we are seeing is something that a lot of voters won't necessarily like the smell of, which is intertwining these
charitable operations with bill clinton's own personal efforts to make money for himself and for his family. and the lifestyle, the private jets, the hotels and all of that. all of it is spelled out in enormous detail in these e-mails. >> some would call this ingenious cross-selling, wouldn't they, and others would say this was pay for access. >> reporter: an interesting choice of phrase. what you don't see in these e-mails, at least what i haven't seen, and i've read a lot of them, is any indication that the clinton people gave much thought to what these donors thought they were buying, why would you want to buy this much time of bill clinton, why would you spend this much money on his charitable enterprises, why would you want to give him your private plane to use for the afternoon. all of that seems to be a blind spot by the clinton people. of course we're also learning a whole lot about the really significant infighting between chelsea clinton and doug band, a fascinating sort of edible struggle there between bill
clinton's daughter and a staffer that a lot of people considered to be bill clinton's moral equivalent of an adopted son. fascinating dispute there as well. >> more to come. >> amon, thanks very much. fascinating insights into palace intrigue. north america dings ford's results. that's where we begin tonight's market focus. automakers said a drop in north american sales and costs associated with the company's door latch recall caused profit to slip by more than half. nonetheless, the results were still better than analysts' estimation. the company also said it plans to cut back on production in the current quarter. ford shares were off 1% to 1174. process and revenue at twitter climbed in its latest quarter, beating street expectations. and in an effort to turn a profit next year, the company plans to lay off 9% of its total workforce. that's about 350 employees. twitter rose 11 cents to 1740. energy company conoco phillips narrows its loss more
than expected thanks in part to cost cuts. the company reported a drop in revenue as a rise in oil production was offset by lower selling prices due to the ongoing commodity slump. shares were up 5% to $44 even. the health insurer aetna topped analysts' earnings expectations helped in part by higher fees and cost cuts. the company, which has said it will discontinue its participation in most of the affordable care plans, added it expects losses from those government plans to persist. the company's ceo says the flawed exchange isn't expected to improve anytime soon. >> we need to fix the risk adjustment program. this population has clearly got more morbidity than had been initially anticipated. if we can fix the risk adjustment, we can stabilize the market. until that happens, it's only going to get worse. >> aetna was off a fraction to 1
$110.83. solid results prompted bristol-myers squibb to raise its 2016 guidance and launch a share buyback program. the company's ceo says the future is bright. >> we have really exciting potentially innovative medicine, not only in on college. in immunoscience, fibrosis. all of those programs are moving forward and the long term prospects for the growth of the company are really good. >> shares rose 5.5% on the session. community health systems warned of a third quarter loss ahead of its report next week. the hospital operator said fewer patient admissions would cause revenue to take a hit. community health's stock was downgraded by two banks following the news. shares were cut in half, closing at $5.05. shares of gnc holdings took a dive after the vitamin and
supplement company posted revenue that missed estimates. the company said same store sales fell. management says it's addressing key issues it hopes will kick start growth. investors didn't hang around today to find out. shares plunged nearly 25% to $15.13. and china-based shipping company zto express made an inauspicious stock market debut today, raising almost $1.5 billion in its initial public offering, the largest in the u.s. this year. that's the good news. less good news is the stock opened at $18.40. that was a full dollar below the company's initial offer price. and shares began to swoon from there, ending the day down 15% to $16.57. coming up, why georgia, home to delta, home depot, and coke, is now a battleground state in the race for the white house.
here's a look at what to watch for tomorrow. big oil earnings from dow components exxonmobil and chevron are out. we'll find out how fast the economy grew in the third quarter with the release of the gdp report. we'll also get a fresh read on consumer sentiment. that's what to watch for on friday. agriculture and trade are two economic issues voters of georgia are thinking about ahead of election day.
while george historically votes republican, this election cycle, nothing is certain. andrew ross sorkin reports tonight from this somewhat surprising battleground state. >> reporter: with two weeks to the election, we are in georgia, which is turning into a battleground state, talking to local business people, politicians, and others about what are the most important economic issues here in georgia. georgia is joining the list of typically conservative states that have turned into battlegrounds. >> the "atlanta journal-constitution" showed clinton ahead. it's been close throughout. i still think it will be a close election. >> reporter: the peach state has voted for republicans in the past five presidential races. while trump has helped move the needle to the left in recent polls. >> we have folks on the ground. we have 13 field offices across
the state. we're running competitive sta state house and senate raises. we're getting all done that we can. >> reporter: agriculture is a top campaign issue. the state is known for cotton, soybeans and of course georgia peaches. the top exports, according to the census bureau, are aircraft and engine parts. georgia is home to multiple shipping ports, meaning trade and the trans-pacific partnership are top of mind. >> america has to have open trade. what we haven't had is fair trade. donald trump has talked about creating a level playing field. >> reporter: the poultry industry come dominates the nor part of the state. the state is home to delta and ups. >> i try to grow revenue and invest capital. the country needs to do the same thing. >> reporter: early voting in georgia began last week but has been completed by hurricane matthew. the state's top election
official refusing to extend voter registration deadlines in counties hit hardest by the storm, prompting criticism by voting activists. trump is ahead in the polls but clinton is gaining ground as we head into the final stretch. andrew ross sorkin, atlanta, georgia. that's "nightly business report" for tonight. i'm sue herera. thanks for joining us. >> i'm tyler mathisen. have a great evening, everybody. hope to see you right back here for "nightly business report" tomorrow night.
>> explore new worlds and new ideas through programs like this made available for everyone through contributions to your pbs station from viewers like you. thank you. >> the effects of unmanaged stress are a major risk factor in almost every serious modern disease, including heart disease, stroke, high blood pressure, diabetes, and even dementia. but it doesn't have to be that way. >> announcer: dr. martin rossman is a clinical faculty member at the university of california medical school and a pioneer in the study of the healing power of the mind. >> mind-body medicine is simply the term we use for using your mind to support the powerful healing abilities already built